VA Look-Back Rule Change

The landscape of need-based VA pensions and benefits is quietly changing this month, including the new requirement of a 36-month “look-back” period to determine financial eligibility. If you’re a veteran or the spouse of a veteran, here’s what you need to know:

What Are Need-Based VA Pension Benefits? Veterans Pension and long-term care benefits are tax-free monetary benefits designed specifically to help low-income wartime veterans. Not to be confused with military retirement or VA disability payments which are not need-based, the Department of Veterans Affairs (VA) administers supplemental income for wartime veterans who financially qualify in the areas of supplemental pension income and additional allowances for long-term care benefits in the form of aid and attendance or housebound care needs. There are three levels of VA Pensions, including the Basic Pension, Aid & Attendance, and Housebound. The pension amount is determined by the difference between the veteran’s countable income and VA’s maximum annual pension rate (MAPR). (Note: Recipients may qualify either for Aid and Attendance or Housebound benefits, but not both.)

Who is eligible? Veterans who have met minimum service requirements including serving at least one day during a wartime period may qualify. Additionally, the veteran must be age 65 or older or fall into one of several other categories of need including having a disability, residing in a nursing home or receiving Social Security Disability Insurance or Supplemental Security Income. For Aid and Attendance the veteran also must show the need for the aid of another person to perform activities of daily living, and for Housebound status the veteran must be confined to the home because of permanent disability. Spouses of eligible veterans may also qualify.

What are the eligibility changes? Previously, Congress had set separate income limits to qualify for Veterans Pension and long-term care benefits. When it came to total assets, guidance was not specific. Evaluation was based on a “snapshot” of the current picture at the time of application. Further, under the old rules, veterans could freely transfer assets up to the time of application with no penalty, including transferring assets to a child or an irrevocable trust. With the new changes, veterans are now evaluated under the maximum Medicaid Community Spouse Resource Allowance (CSRA), and asset transfers, which include gifts, are subject to a 36-month look-back period. As the VA stated in its ruling, “We believe this rulemaking generally provides clearer guidance for pension entitlement decisions than existed previously, which will promote consistent benefit decisions, streamline processes, and constitute an important improvement over past practices.”

What else should I know? Here are some key facts.

The maximum assets a Medicaid applicant’s spouse can retain in 2018 is $123,600, which will be indexed to inflation every January just as Social Security income is now.. Unlike Medicaid, however, the VA will add annual income to the value of assets when calculating total resources.

An applicant’s home (on a parcel of up to two acres) will not count regardless of whether or not the applicant is in a nursing home.

Certain medical expenses, including payments to assisted living facilities, may also be deducted from countable income under the new rules.

In addition to the look-back provision, the VA will be able to assess a penalty period for transfers within the three-year look-back, of up to five years using a specific formula which considers the value of transferred assets and the maximum annual pension rate (MAPR).

The look-back rule would not apply to transfers made to a trust established to benefit a veteran’s child who has been rated by the VA as incapable of self-support at the age of 18.

This is only a broad overview of the new VA ruling. VA benefits eligibility and the new requirements are complex entitlement areas. If you or your family think you may be impacted by the new ruling and its provisions, .